March returns of +2.30% (USD) take Q1 returns to +3.03%, a sound start to the year and compares to 2.42% return for the index respectively (+5.03% in Q1).

All strategies contributed positively with the strongest contribution coming from Long/Short and Macro Managers.

Powell is having a tough time here, indicating he is ready to cut and then having to swallow his words again and stay put, possibly for longer than originally expected. And then you have ex­-central bankers and Jamie Dimon saying that rates may need to rise to 6.5%. We are entering a stagflation environment and the 1970s are back again. Market participants listened and moved their expectations from 6 rate cuts in December 2023 to practically none expected at all for 2024, a roller coaster ride. Equities did not really listen to what is happening in the bond market with the S&P500 up 10%. Inflation is still better for equities (than for bonds).

Our Equity Long / Short strategies performed well in March and most of them generated returns ranging between 6% to 8% in Q1. Our Multi Strategy managers also did well throughout the quarter and Macro started performing well in March. During our manager meetings in Q1, two of our macro managers discussed the challenges facing Japanese monetary policy makers given the pick-up in inflation. Having maintained its current very low policy rates (between 0.0-0.1%) while keeping its Yield Curve Control policy in place implies a continued loose monetary policy, which has been supportive to Japanese equities but has taken the Yen down to a 34 year low against the USD. Ramifications of a change in its policy may be felt on a global scale as for decades the Japanese have been important investors in foreign assets which yield(ed) more than Japanese bonds. Falling interest rates elsewhere while Japanese rates are rising may change this dynamic.

The war in Ukraine and Iran/Israel tension drive energy prices up. We think that this is a relatively short-term phenomenon that will abate.

An AI boom, albeit deflationary in the long run, will lead to more data centers which comes with plenty of related infrastructure spending and energy consumption. Both geopolitics and AI are driving energy prices higher. On the other side of the coin we have overleveraged Governments and a looming crisis in Commercial Real Estate, debt refinancing in Private Equity and Private Credit, which cannot handle higher rates or high rates for much longer.

Thank for your trust and we are confident our managers will continue to navigate smoothly in these complex markets.